Overall Industry BSI Drops 3 Points from Previous Month
Import Raw Material Prices Rise Due to Won-Dollar Exchange Rate Increase
Container unloading operations are underway at Busan Port Sinsundae Pier. [Image source=Yonhap News]
As concerns over an economic recession grow due to sharp interest rate hikes in major countries including the United States, the business sentiment among domestic companies has turned downward after a month of improvement.
According to the "September Business Survey Index (BSI) and Economic Sentiment Index (ESI)" released by the Bank of Korea on the 29th, the BSI for all industries this month was recorded at 78, down 3 points from the previous month.
The BSI is a statistic that surveys companies' judgments and outlooks on the current business situation; if negative responses outnumber positive ones, the index falls below 100.
The overall industry BSI had declined for two consecutive months since May (86), then slightly rose last month, but fell again after just one month.
The Bank of Korea explained, "Amid persistent high inflation and concerns over economic slowdown due to interest rate hikes in major countries, the BSI fell 3 points compared to the previous month, mainly in the manufacturing sector."
The manufacturing sector's business condition BSI for September was 74, down 6 points from the previous month.
Declines were centered on electronics, video, and communication equipment (-13 points), primary metals (-11 points), and other machinery and equipment (-9 points). This is interpreted as a result of falling semiconductor prices and rising import raw material costs due to the recent increase in the won-dollar exchange rate.
By company size, both large enterprises (-8 points) and small and medium enterprises (-4 points) declined, and by company type, both export companies (-6 points) and domestic companies (-6 points) contracted.
Companies cited rising raw material prices, uncertain economic conditions, labor shortages, and increasing labor costs as difficulties. Compared to the previous month, the proportion of exchange rate concerns rose (by 4.8 percentage points), while the proportion of raw material price increases fell by 3.9 percentage points.
The manufacturing sector's business outlook BSI for next month (75) also dropped 7 points from the previous month.
The non-manufacturing sector's September business condition BSI was 81, down 1 point from the previous month. While arts, sports, and leisure rose by 5 points, construction (-3 points) and wholesale and retail trade (-3 points) declined due to a slowdown in the housing market and rising prices.
The non-manufacturing sector's business outlook BSI for next month (81) also fell 1 point from the previous month, mainly due to declines in information and communication (-4 points) and professional, scientific, and technical services (-3 points).
The September Economic Sentiment Index (ESI), which reflects the BSI along with the Consumer Sentiment Index (CSI), recorded 98.0, down 1.3 points from the previous month. An ESI below 100 means that the economic sentiment of all private economic agents, including companies and households, has worsened compared to the past average.
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